The declaration by the US Defence Secretary, Mr William Cohen, that Washington was reducing its forces in the Gulf, is seen by the Arabs as an admission by the Clinton administration of defeat in its latest engagement with Iraq.
About 20,000 of 37,000 military personnel are to be recalled, and its naval flotilla is to be reduced from three carrier groups to one.
The US simply - to paraphrase the nursery rhyme - sailed its ships into the Gulf and out them again without engaging the enemy or firing a missile. As far as the Arabs are concerned, this defeat was administered by a patient and non-confrontational Iraq rather than a bellicose Baghdad, which simply waited for the wages of time to do their work instead of provoking a crisis.
This led the Gulf Arabs, in particular, to conclude that US deployment had nothing to do with a genuine threat to their security but everything to do with US politico-military domination of the oil-rich region and US arms sales to overly nervous Gulf rulers.
Although Washington doubled its deployment during the February crisis with Iraq, this high level of military commitment could not go on forever.
The US had deployed its fleet, planes and men without obtaining financial backing from its Gulf allies, Saudi Arabia and Kuwait, which had covered costs for previous deployments but refused to pay for the latest adventure. The Defence Department has to absorb the high cost, which will run into billions of dollars.
The Pentagon had warned the Clinton administration in February that the Gulf deployment could not go on beyond June because the US could not meet its other global military commitments while sustaining such a heavy concentration in the Middle East.
US ships, planes and troops could not remain welcome in such a politically sensitive region as the Gulf where the US has lost much of its influence because of its failure to deliver Israeli withdrawal from occupied Arab land in the peace process.
There were also two other limitations on the US - the advent of Arabia's stupefyingly hot summer and the fact that marines and sailors cannot remain on board their ships for long terms of duty without shore leave. The conservative Gulf emirates and Saudi Arabia hardly offer the sort of entertainments US servicemen crave.
By sailing into the Gulf and out again, the US has diminished its credibility in a region it is already in short supply. Since the beginning of the year, half a dozen regional players have defied the US on major issues.
Baghdad successfully undermined US attempts to make a case for military strikes against Iraq because of its refusal to give UN inspectors freedom of the country. Furthermore, Baghdad it stood its ground and escaped retribution.
Tehran, which has adopted a US-friendly stance, has nevertheless refused to submit to pressure over the equipping of two nuclear power plants by Russia or to suspend its missile development programme. Syria and Lebanon have rejected US pleas to curb the Hiz bollah-led resistance against Israel's occupation forces and to accept Israel's proposal for a conditional withdrawal from south Lebanon.
Saudi Arabia not only refused the US permission to launch air raids from its territory against Iraq but also achieved reconciliation with Iran, Washington's main antagonist in the region.
The Israeli Prime Minister, Mr Benjamin Netanyahu, has consistently rejected the US plan for West Bank redeployment which could relaunch Israeli-Palestinian negotiations and preserve the moribund peace process.
Mr Cohen has warned the Iraqi leader President Saddam Hussein to "take no solace" from the cutback in US forces in the Gulf, saying they could still strike hard if the need arose. Iraq said the US should pull out all its forces from the Gulf region rather than reducing their number because there never was any justification for their presence there.